BYD's rapid growth should have other car brands worried.
Last week the Chinese EV-maker produced its nine millionth new energy vehicle (NEV), which includes electric cars and plug-in hybrids.
Just 12 months ago it was celebrating production of its fifth millionth vehicle. Nine months before that, in December 2022, it celebrated its three millionth.
At that rate, the company could be celebrating its 15 millionth car by the end of 2025.
It’s a rise that is nothing short of remarkable for a brand that started life in 1995 as a manufacturer for rechargeable phone batteries by chemist (and engineer by trade), Wang Chaunfu.
Now the company is the world’s second largest EV manufacturer, having briefly toppled Tesla as number one in the fourth quarter of 2023.
It is also one of the biggest makers of electric car batteries with its lithium-iron phosphate batteries found in a range of electric cars, including some Teslas.
What’s more remarkable is that it’s managed to do so while being locked out of the North American market, with 100 per cent tariffs instated by the US and Canada.
The European Union has also slapped a 17 per cent tariff on the brand, in addition to a 10 per cent duty that already exists on all imported vehicles.
Overseas deliveries are still projected to account for about 14 per cent of BYD’s total sales this year, around 500,000 units out of an estimated 3.7 million, according to Bloomberg.
BYD’s Executive Vice-President Stella Li said the company wants that figure to increase to 50 per cent in the future.
“Our overseas market will account for a relatively large proportion of our global sales in the future,” said Li at an investors meeting in Shenzhen in August.
Li stopped short of giving an exact time frame for when it expects to achieve that goal, though it could be sooner rather than later.
BYD is powering ahead with overseas investment to circumvent heavy tariffs.
The brand recently announced its plans to become the first major Chinese automaker to establish a manufacturing presence in Europe, with plans to build an assembly plant in Hungary and a second one earmarked for Turkey.
It already has a factory in Thailand with production set to expand in Brazil. It’s also poised to open a factory in Mexico, which could see it enter the US market.
To boost its brand awareness overseas, BYD has inked a deal with Uber to add over 100,000 of its vehicles to the ride sharing platform's fleet.
It follows the sponsoring of major international football tournaments such as the UEFA European Championship and Copa America.
European automakers, meanwhile, find themselves in increasingly tumultuous economic situations.
Shares in European-American owned Stellantis, the conglomerate behind brands such as Citroen, Fiat, Jeep and Peugeot, fell 14 per cent on global markets on Monday as the company slashed its profit outlook, citing weak demand and increasing competition from China.
The company said it expects to deliver 200,000 fewer vehicles to North America in the second half of 2024 than it did last year, according to CNN.
It follows a similar announcement from Volkswagen, the world’s second largest automaker, as it cut its profit outlook for the second time in three months while it navigates possible factory closures in Germany for the first time in the brand's 87-year history.
According to Forbes, Volkswagen expects to deliver nine million vehicles this year, down considerably from a previously forecast three per cent rise – roughly 250,000 additional vehicles – on last year’s 9.24 million deliveries.
So, how in an increasingly precarious market has BYD had so much success?
One major factor is huge government-funded support, a key justification for western tariffs.
The Chinese government is estimated to have provided 30 billion USD worth of tax breaks for its domestic EV sector since 2010, a figure that could rise to US$97 billion by 2027, according to Bloomberg.
That’s in addition to other benefits like interest-free loans, cheap land for manufacturing facilities and government incentives for consumers to trade in petrol and diesel cars for EVs.
Western automakers producing EVs in China like BMW, Tesla and Volkswagen have also benefited from those perks.
BYD has also made vertical integration – a fancy term meaning it builds its own parts – a priority.
For example, 78 per cent of the parts for its flagship model, the BYD Seal, are built in-house.
In comparison, according to Bloomberg, Tesla produces 68 per cent of parts for its US-made Model 3, while Volkswagen makes 35 per cent of parts for its ID.3 EV.
It’s a strategy that's ensured it can maintain low costs and firm control over its supply chain.
For example, the average BYD on sale in Australia costs $45,569, before on-road costs, compared to $55,400, before on-road costs, for the average Tesla.
And with advancing battery technology that rivals industry-leader CATL, BYD continues to shape up as the next big automotive success story, perhaps one the likes of which we’ve never seen before.
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